The single-family housing market continued to show signs of slowing in April as rising mortgage rates and ongoing supply chain disruptions continue to raise housing costs and take a toll on the housing market.
Due to a surge in multifamily production, overall housing starts held fairly steady, falling just 0.2 percent to a seasonally adjusted annual rate of 1.72 million units, according to a report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.
The April reading of 1.72 million starts is the number of housing units builders would begin if development kept this pace for the next 12 months. Within this overall number, single-family starts decreased 7.3 percent to a 1.10 million seasonally adjusted annual rate. The multifamily sector, which includes apartment buildings and condos, increased 15.3 percent to an annualized 624,000 pace.
“Lower single-family construction starts in April reflects our recent builder surveys showing notably weaker confidence in the single-family market, as rising mortgage rates and building material construction costs are driving more potential buyers out of the market,” said Jerry Konter, chairman of the National Association of Home Builders (NAHB) and a home builder and developer from Savannah, Georgia.
“Today’s housing starts report is more evidence that the single-family market is slowing,” said NAHB chief economist Robert Dietz. “While single-family starts are up 4.1 percent on a year-to-date basis, we’re expecting flat conditions for the year and a decline in 2023 as housing affordability challenges in the form of higher mortgage rates and construction costs continues to worsen housing affordability conditions. Single-family permits are down 2.3 percent on a year-to-date basis thus far in 2022.”
On a regional and year-to-date basis, combined single-family and multifamily starts are 6.3 percent higher in the Northeast, 5.2 percent higher in the Midwest, 13.3 percent higher in the South and 8.3 percent higher in the West.
Overall permits decreased 3.2 percent to a 1.82 million unit annualized rate in April. Single-family permits decreased 4.6 percent to a 1.11 million unit rate. Multifamily permits decreased 1.0 percent to an annualized 709,000 pace.
Looking at regional permit data on a year-to-date basis, permits are 4.9 percent lower in the Northeast, 4.0 percent higher in the Midwest, 3.5 percent higher in the South and 1.3 percent higher in the West.
Single-family permits authorized but not started are up 8.5 percent year-over-year to 153,000 units. Meanwhile, single-family units under construction are still growing, up 26 percent year-over-year to 815,000 units.